J. H. Ewing and Sons v. Montgomery

• Decision Date: 12 November 1971
• Docket Number: No. 3,Nos. 46567-46569,s. 46567-46569,3
• Citation: 124 Ga.App. 836,186 S.E.2d 335
• Court: Georgia Court of Appeals
• Parties: J. H. EWING & SONS v. MONTGOMERY. The SEVENTH SEVEN, INC. v. MONTGOMERY. MONTGOMERY v. The SEVENTH SEVEN, INC., et al

Page 335

186 S.E.2d 335

124 Ga.App. 836

J. H. EWING & SONS v. MONTGOMERY.

The SEVENTH SEVEN, INC. v. MONTGOMERY.

MONTGOMERY v. The SEVENTH SEVEN, INC., et al.

Nos. 46567-46569.

Court of Appeals of Georgia, Division No. 3.

Nov. 12, 1971.

Jones, Cork, Miller & Benton, Wallace Miller, Jr., Macon, for appellants.

George E. Saliba, Macon, for appellee.

Syllabus Opinion by the Court

EBERHARDT, Judge.

On January 10, 1969, W. P. Montgomery sold and conveyed to The Seventh Seven, Inc. (7-7) real property in Brunswick known as the Lanier Plaza Shopping Center. At the time of the sale and prior thereto lease contracts were in force with tenants occupying business establishments in the Plaza, and J. H. Ewing & Sons was collecting the rents and otherwise acting as leasing manager. At issue here is the proper method of apportionment between Montgomery and 7-7 of 'overage,' 'percentage' or 'excess' rent as provided for in the leases with Harold's Men's Shop, Inc., Brunswick Vogue, Inc., and Arnold's Shoes, Inc.

Each of these leases provides for a fixed monthly rental and, in addition, rental in the form of a percentage of gross sales in excess of a stated dollar volume of annual gross sales. The lease with respect to Harold's Men's Shop provides in paragraph 3 for a percentage rental equal to 5% of gross sales in excess of $135,500 for each 12 months period computed from commencement of the term of the lease. Other provisions of the lease require Harold's to make monthly written statements showing the gross amount of sales for the preceding month and to pay concurrently with the delivery of the statements percentage rental equal to 5% of monthly gross sales in excess of $11,291.67 (1/12 of $135,500). It is further provided that 'Lessor shall make an annual adjustment of percentage rentals paid monthly under this contract so that the total overage rentals paid do not exceed, for the twelve (12) months' period comprising the lease year, the percentage of gross sales, as set out in Paragraph 3 above, if figured on a 12-month basis.'

The Brunswick Vogue lease provides for a percentage rental of 5% of gross sales in excess of $90,000 per annum, but does not require monthly statements or monthly payments of 'excess' rent. The Arnold's Shoes lease provides for rent of 6% of annual gross sales in excess of $107,500 and requires the monthly statements, but does not require any monthly payments of 'excess' rent.

The contract of sale of Lanier Plaza between Montgomery and 7-7 ¹ provides that 'Taxes, rents, insurance . . . are to be prorated between the seller and purchaser from date that the sale is finally closed.' At the closing on January 10, a rent distribution agreement was entered into by Montgomery, 7-7, and Ewing, providing in part as follows: '. . . all rents paid and/or accruing under said leases up to and including this date belong to and shall go to Montgomery, and all rents paid and/or accruing after this date shall go to (7-7)' . . . 'All of said rents on said leases . . . accrued up to and including this date, shall be by J. H. Ewing & Sons delivered to Montgomery . . . and all rents accruing subsequent to this date shall be by J. H. Ewing & Sons delivered to (7-7) . . .' The agreement, also signed by Ewing, provided that Ewing was to continue collecting the rents and was to prorate them between Montgomery and 7-7 as agreed upon.

For their respective rent years involved here, Harold's Brunswick Vogue, and Arnold's Shoes all had excess annual gross sales so that each became obligated for 'excess' or 'percentage' rent. Ewing apportioned the rent between Montgomery and 7-7 according to the proportion of the rent year that each owned the applicable lease. For example, the rent year of Harold's was September 1 through August 31; its annual gross sales totaled $230,351.12; the 'excess' rental was 5% of sales in excess of $135,500 per annum, or 5% of $94,851.12, which amounted to $4,742.60; Montgomery owned the shopping center and lease for 4 1/3 months of the rent year, and there was apportioned to him 4 1/3 twelfths of $4,742.60, or $1,712.61, and to 7-7 the balance.

Montgomery brought the instant complaint against 7-7 and Ewing, contending that he was entitled to rent computed on the basis of gross sales qualifying for percentage rent during the months the leases were owned by him. For example, under his method of computation, monthly sales for Harold's during the four (sic) months Montgomery owned the lease totaled $101,473.26; 1/12 of $135,500 (annual qualifying amount for 'excess' rent) = $11,291.67 (monthly qualifying amount for 'excess' rent); $11,291.67 4 = $45,286.58 (sic); (qualifying amount for four months); $101,473.26 minus $45,286.58 = $56,286.58 (sic) (gross sales in excess of qualifying amount for four months); 5% $56,286.58 = $2,814.32 ('excess' rent due Montgomery); $2,814.32 minus $1,712.61 (amount actually paid Montgomery under Ewing's method of computation) = $1,101.71 additional amount due Montgomery, for which he sued in regard to the Harold's lease.

7-7 counterclaimed against Montgomery for all 'excess' rent paid to the latter, contending that 7-7 was entitled to all of it because the annual qualifying amounts before 'excess' rent would 'accrue' had not been reached while Montgomery owned the leases but had been reached and exceeded while 7-7 owned them. For example, the annual qualifying amount for Harold's was $135,500; and gross sales while Montgomery owned the lease amounted only to $101,473.26, the qualifying dollar volume of $135,500, being reached while 7-7 owned the lease.

All parties moved for summary judgment, Montgomery contending that under his method of computation he was entitled to additional 'excess' rent with respect to all three leases; 7-7 contending that Montgomery was not only entitled to no recovery, but that 7-7, under its method of computation, was entitled to recover of Montgomery all 'excess' rent paid him; and Ewing contending, under its method of computation, that the rents had been correctly apportioned between the two so that no recovery could be obtained against it by Montgomery. The trial court granted Montgomery's motion in the amount sued for with respect to the Harold's lease, but denied the motion with respect to the other two leases. The motions of 7-7 and Ewing were denied, as well as a motion by Ewing, a nonresident of the county, to dismiss because of lack of jurisdiction. Held:

1. The rent distribution contract recites that Ewing had been collecting the rents for Montgomery 'and shall continue to do so for (7-7);' provides for apportionment of rents between Montgomery and 7-7, 'and by delivery of copy hereof to (Ewing, it is) thereby directed to handle and distribute said rents' as provided for in the...